Foreign company registration options in Australia.

This guide provides a brief outline of the foreign company registration options in Australia.

A foreign company that decides to establish a business presence in Australia can do so in several ways. The three most common and simple are:

1. Proprietary company
2. Registered foreign company
3. Representative office

Foreign companies should consider the various ways to enter the Australian market. Each has its advantages and disadvantages, as well as legal, regulatory and taxation implications.

Let’s learn more.

Option 1: Proprietary company

(Also see our guide on setting up a proprietary company in Australia)

Many companies decide to establish a separate Australian entity to manage their Australian operations. This is known as a proprietary limited (Pty Ltd) company.

A Pty Ltd company would be no different from any other Australian Pty Ltd company. However, other Australian companies and government bodies may feel more comfortable interacting with a Pty Ltd than a registered foreign company.

A Pty Ltd in Australia is a business structure that is required to have at least one shareholder and not more than 50 non-employee shareholders.

The company must have at least one director who is a resident of Australia and a resident company secretary if any secretary is appointed. It is also required to have a registered office located in Australia.

The Pty Ltd provides limited liability to shareholders, meaning that the liability falling upon shareholders in the event of a wind-up is equivalent to the unpaid amount (if any) on their shares.

The company cannot engage in fundraising activities that would require the lodgement of prospectus (i.e., seeking to raise funds from the public). They can, however, raise money through private sales of equity.

The process for the establishment and incorporation of a Pty Ltd company is easy, fast and inexpensive.

Incorporation steps of a proprietary company

The incorporation of a Pty Ltd involves four main steps:

1. Choosing and reserving the company name by submitting Form 410 – Application for Reservation of a Name to the Australian Securities and Investment Commission (ASIC)
2. Deciding how the company will be governed:
   • Company constitution,
   • Replaceable rules, or
   • A combination of both
3. Appoint a resident director and company secretary
4. Registering the company through the Business Registration Service

Option 2: Registered foreign company

(Also see our guide on setting up a registered foreign company in Australia)

If a foreign company wishes to carry out business in Australia but does not wish to incorporate a separate Australian entity to manage its Australian operations, the foreign company can register directly with the ASIC.

A registered foreign company in Australia is not a separate legal entity from the parent company. This is similar to establishing a representative office or branch of a foreign company in another country.

Incorporation steps of a registered foreign company

There are three key steps to setting up a registered foreign company in Australia.

1. Ensuring the name is available and reserving it
2. Complete Form 402 – Application for Registration as a Foreign Company and prepare supporting documents:
   • A certificate from the company’s governing body in its home jurisdiction that confirms the company is registered.
   • A certified copy of the company’s constitution
   • A completed Form 418 – Memorandum of appointment of local agent
   • A memorandum stating the powers of certain directors
3. Submitting the form and supporting documents to the ASIC

Option 3: Representative office

Foreign companies that want a presence in Australia but do not want to carry on business activities may consider establishing a representative office.

The office, however, can only engage in activities that do not generate income; it can only be used to explore the Australian market, seek new potential clients and promote products.

If the representative office signs contracts or sells, it would be considered as carrying on business and a permanent establishment in Australia.

A representative office is not required to be registered with the ASIC, but it must register with the Australian Taxation Office (ATO) if the representative office has employees.

Incorporation steps of a representative office

The steps of registering a representative office in Australia consist of three steps.

1. Appoint a minimum of one director or officer who is a natural person and an Australian resident. The director will also have to act as the representative agent for the parent company.
2. Establish a physical office location
3. Register with the ATO if the office has employees

Comparison of foreign company registration options in Australia

Conclusion

Given its strong economy, robust banking system and excellent quality of life, it is no surprise that we receive many enquiries from foreign companies about international expansion to Australia. Feel free to contact Acclime if you wish to have a presence in Australia.